ELR Citation: 44 ELR 20022
No(s). 12-3722 (7th Cir. Jan 27, 2014)

The Seventh Circuit held that a lower court should have awarded a real estate firm double damages for harm caused by an oil company during its attempt to clean up pollution at gas stations in Michigan the firm leased to it. The firm filed a breach of contract claim and a waste claim for eight sites in Indiana and Michigan. The lower court rejected the contract and waste claims relating to two condemned properties in Michigan, and rejected the remainder of the contract claims. The other six waste claims went to trial, and the firm prevailed. The firm sought double damages for the Michigan sites pursuant to a state law providing that a “tenant for years who commits or suffers any waste . . . without having a lawful license to do so, is liable for double the amount of actual damages.” The original leases, signed in 1983, were for 11 years, with the option to renew. But in 1992, the leases were amended because of new EPA regulations that required extensive cleanup of the sites. As a result, the parties amended the leases and converted them from fixed-term to a month-to-month basis until the remediation was completed. Because the oil company technically was not a "tenant for years" during the period of remediation when it committed the waste for which the jury found it liable, the lower court ruled that the firm was not entitled to double damages. The Seventh Circuit disagreed. The literal sense is not the correct one under the circumstances of this case. It would not make sense to limit liability for waste simply because a lease originally for a specified time had to be extended for an indefinite period to allow a response to unforeseen changes. In addition, the court vacated the lower court's dismissal of the contract and waste claims relating to the two condemned properties in Michigan. The oil company had allowed the buildings on those properties to fall into ruin and collapse, and the lower court ruled that the firm's claims must be dismissed because it had "consented" to the removal of the buildings. But it had had no choice; the buildings had been condemned.